Motorola Cuts Benefits While Market Share Droops (MOT)


Motorola (MOT) keeps cutting costs while its mobile phone business reboots: The company says today it’ll permanently freeze pension plans, temporarily stop matching employees’ 401(k) contributions, and not offer salary increases in 2009. (We can’t imagine this will help recruiting.)

Motorola’s two co-CEOs, Greg Brown and newly hired mobile phone chief Sanjay Jha, will also take 25% salary cuts. Brown will voluntarily forfeit his bonus, and Jha will take a reduced bonus in stock. Nice, but as we noted in August, 95% of Jha’s compensation is in equity awards, of which 60% are options.

Meanwhile, no good news for Motorola’s mobile phone business. As the economy sours, the broader mobile phone industry will shrink next year, and Motorola will likely continue losing market share. Citi analyst Jim Suva expects Motorola to finish 2009 with less than 7% global market share, down from 8.2% last quarter, he said in a note today.

In October, Motorola announced that its breakup into two companies — originally scheduled for next summer — is on hold.

We like Motorola’s strategy to focus on fewer, more powerful mobile phone platforms, and we think new mobile phone CEO Jha is sharp. But we’re still sceptical until the company proves it can compete with Apple (AAPL), RIM (RIMM), Nokia (NOK), and others.

See Also:
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